The role of business in responding to and managing global risks

The WEF’s Global Risks Report 2016 has put the need to build resilience—described as the resilience imperative—at the heart of its response message. It notes an urgent need to find new avenues and more opportunities to mitigate, adapt to and build resilience against global risks. “Collaboration across countries, areas of expertise and stakeholder groups is necessary to effectively address global risks and deliver on the resilience imperative,” writes Klaus Schwab, founder and executive chairman of the WEF, in the report’s preface. But this is not easily achieved, adds the report. “Across every sector of society, decision-makers are struggling to find common ground as they are faced with heightened volatility, uncertainty, interconnectedness and pace of change,” continues Mr Schwab.hideThe WEF points out that addressing global risks lies beyond the capacity of individual businesses. However, in its Global Risks Report 2016 the WEF says that individuals and organisations must recognise the imperative to contribute to resilience and know what and how they can contribute. The solution requires collaboration between the public and private sectors, expert speakers at the launch of the report agreed. While business is working hard to do its bit, more can be done, they suggested. More public-private partnerships are one route to likely success, they added. And, as the WEF notes, businesses themselves must address the issues flagged up in its latest report to ensure their own survival. No single entity—public or private—possesses all of the necessary authority, resources or expertise to ensure its resilience against catastrophic events, says the Global Risk Report 2016. Instead, resilience necessitates collaborative approaches. Public-private partnerships are a crucial part of the solution, states the WEF. “Public-private partnerships that harness the core competencies of each sector have a critical role to play in strengthening resilience capacity and maximising the benefits of investment in risk monitoring, business continuity planning and disaster preparedness. Instilling a culture of collaboration will enable effective partnerships before, during and after disasters,” it stresses. Beyond the global good, it is in the key interest of businesses and multinationals to find new ways to partner with governments to address global risks, says the WEF. “Many risks, ranging from energy security to unemployment, can only be addressed through diverse stakeholders recognising the need for joint action. Such collaboration requires the identification of key risks and related interests and strong alignment and robust agreement among business and other stakeholders on the need to address them,” it says. Businesses must also strengthen their own resilience to “ensure continued operation and survival in the face of risks”, adds the WEF. Increasingly, businesses need to strengthen their scenario and emergency planning capacity to analyse complex and often uncertain interdependencies if they are to build resilience to global risks, it notes. Furthermore, the resilience of any individual business depends heavily on the resilience of its suppliers and purchasers, whose supply chains can span many countries, it adds. “The need for business leaders to consider the implications of these risks on their firms’ footprint, reputation and supply chain has never been more pressing,” noted John Drzik, president, global risk and specialties at Marsh. “There are areas for public and private cooperation in managing some of these risks,” he added. “There is scope for that kind of collaboration. One of the things we have highlighted through the years in this report is the forum to bring together government and business leaders to try and encourage that kind of dialogue,” said Mr Drzik. “We would like to see more, but there has been increasing public-private collaboration on some of the key risk issues. I do think however if you look at the broader risk landscape most risks are rising… I do think it is a riskier world right now,” he continued. Espen Barth Eide, head of geopolitical affairs at the WEF, is “heartened” by the number of chief executive officers who “take a real concern about the state of the world”. “They are telling us and everybody else who will listen that they see they have a role to play,” he added, citing the fight against corruption as an example. “It is extremely important that we think outside the box,” he said. Politicians and other stakeholders from the private sector, non-governmental organisations and academia need to come together to have a broad debate about the long-term threats and long-term responses, he continued. “There needs to be a focus on collective responsibility at a higher level. You need genuine leadership and trust to focus on those longer-term solutions,” he said. Cecilia Reyes, chief risk officer at Zurich Insurance Group, specifically called for action from business and government to adapt to climate change risks. “We have to adapt. We have to take actions today to adapt to the impact of climate change. That is the call for resilience that is being highlighted in the report. Specifically for multinational companies, the consequences of climate change pose huge challenges—whether it’s natural catastrophes and how they disrupt our operation, damage to infrastructure, increasing price or volatility of commodities,” she said.

The role of business in responding to and managing global risks

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